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Money is deeply, fundamentally weird.

Ever since I read this article in Wired magazine (you know, the paper things that are thinner than books and you still find in doctor’s offices?) I’ve had this feeling that the sands are shifting beneath my feet. How can you truly know the value of what’s in your wallet? Count your money? Try again. Money is something other than what we normally think it is. The financial credit crisis of 2007-ish happened in part because of people and groups wanting to buy lots of debt. Why does anyone want to buy someone else’s debt? It makes sense (debt gets paid back with interest, that make the owner of the debt money)- but is pretty weird, really. And many people, myself included, felt that they ‘lost’ a large amount of value following that time- but what was that value really? (an awesome overview of this whole thing can be found at This American Life’s podcast about it- HIGHLY recommended). Why does the economy contract? Isn’t it weird that tomorrow there may be more (or less) value in the world than there is today?

Money is fluid, and so is value. Imagine that you have currency based on gold (work with me here). You can set a value for a certain amount of currency based on the very real mass of gold that it represents. No problems. Everything is smooth sailing, right? Well, all the sudden a massive gold vein is discovered near a subway station in Manhattan. And all of the sudden the value of what you have in your pocket is not what it was in the morning. You worked the same amount for it, right? So why did it change?

The Wired article describes a market, based in the online game Everquest, then just a few years old. In this game players can earn currency (in virtual gold pieces I think) by playing the game. The demand, at that time, was such that the virtual gold pieces had real value. That is, there was an exchange rate between Everquest ‘gold’ and real dollars. Think about it for a minute. Instead of thinking, “what weirdos are going to pay real money to buy gold in an online game”, the real question is what does this say about our “real” money? You could, in theory, go to work all day in a virtual world for virtual currency- that is, play a game that enough other interested parties are playing- and then exchange that currency for things that you really need. Who carries coins and bills in their pockets? Credit cards are where it’s at: Money has gone in directly from your employer then gets transferred to the store you’ve made a purchase at- no physical instantiation involved at all. There have been sweatshops uncovered where the workers are playing games for days on end to get virtual currency (that then is turned into ‘real’ money).

The more recent advent of Bitcoin is a similar-type example of our ability as humans to strike bargains between each other. Their (it’s a decentralized, open source effort, so maybe that’s more of “our”) system is pretty cool and complex, but with thought behind it, which is more than I can say of the US monetary system. Money is a bargain between people. It’s not only based on trust, hope, and need, it’s actually a human instantiation of those very emotions. So when you pull out a dollar bill to pay for something, think about how you’re handing over your trust, hope and need to the sales clerk. But I wouldn’t advise mentioning that to them. That would be weird.